Company Report: BW Offshore
BW Offshore With Cidade de Sao Vicente en-route to Brazil, and Pioneer under construction, BW Offshore has every reason to be optimistic, despite the current economic slump

A Process Module being lifted onboard the BW Pioneer at Kepp

BW Cidade de Sao Vicente leaving Keppel Benoi for the Tupi f

The FPSO Berge Helene operating in Mauritania for Petronas

BW Offshore, previously known as Bergesen Worldwide Offshore, is a Norwegian operator of floating production storage and offloading (FPSO) vessels. With over 25 years’ experience, it is currently one of the leading FPSO contractors in the world, operating internationally in Malaysia, Mauritania, Mexico, Nigeria and Russia, with a total of 13 FPSO vessels.

“BW Offshore is recognised for its openness, ability to adapt and the way we engage the oil and gas industry,” says Tom Arne Kristiansen, EVP technology. “We are one of the world’s leading FPSO contractors and a market leader within advanced offshore loading and production systems to the oil and gas industry.

“We are also committed to the future of our industry through innovation in our technology division, APL, which is based in Arendal, Norway, and is a market leader in the development, fabrication and sale of advanced systems for offshore production. It has delivered solutions for production vessels, storage vessels and tankers in a wide range of field developments.

“Through such efforts, BW Offshore ensures that customer needs are met with some extremely versatile solutions,” he adds.

Kristiansen is responsible for FPSO business development, the technical division and FLNG. He joined Bergesen in 2002 and has since served as Topsides Manager, Engineering Manager and Director – Technical Division.

Before joining Bergesen, he worked for ABB Offshore System as Lead Process Engineer and Engineering Manager. He also has a Master of Science (M.Sc.) in Mechanical Engineering from the Norwegian Institute of Technology in Trondheim.

“BW Offshore has been a pioneer in many respects,” he continues. “I believe it was the first company to operate an LPG FPSO with its operations in Angola, back in 1982, and has since delivered 12 other FPSOs.”

A BRIGHT FUTURE
BW Offshore recently completed a new FPSO, BW Cidade de Sao Vicente, which is currently en-route to Brazil.

“That was a fast track project, which we started with Petrobras less than one year ago – in April 2008,” Kristiansen explains. “The contract is for 10 years, plus we will have an option period of five years. It recently left Singapore, now headed for the giant Tupi oil field. The journey to Brazil will take about six weeks and it will commence operations in the second quarter of 2009.”

Tupi is one of Brazil’s biggest offshore fields. It has lots of potential and lots of oil. Indeed, Petrobras estimates the recoverable volume of oil and gas at the ultra-deep field at between five billion and eight billion BOE, making it one of the biggest discoveries in years outside OPEC countries, comparable in size to the Kashagan oil field in Kazakhstan.

Continuing, Kristiansen comments: “We converted and modified the FPSO BW Peace to meet Petrobra’s specifications. It has been a schedule-driven project in which the main process modules and key components were engineered and delivered within eight months, which is a near record delivery time. The conversion then took place in Keppel Shipyard Benoi, Singapore and was completed in February.

The entire duration of the project was just 335 days.Remarkably, this is not BW Offshore’s only major project.

The company is also building and will then operate what will be the first FPSO in the US Gulf of Mexico, due to start operations in 2010.

“BW Offshore has been selected for the conversion, installation and operation of an FPSO at the Chinook and Cascade fields in the Gulf of Mexico,” says Kristiansen. “The FPSO will be installed on the field with a water depth of 2,600 metres, probably the deepest water depth on which an FPSO has ever been installed.

”The vessel, to be named BW Pioneer, is being constructed, as in the case of BW Cidade de Sao Vicente, on behalf of Petorbras, Brazil’s state-run oil firm.

“It is currently under conversion in Keppel Shipyard Tuas and we plan to set sale later this year,” adds Kristiansen.

FEELING THE CRUNCH
Despite the long-term value of these and other 11projects, BW Offshore experienced a significant reduction in the EBIDTA from operations last year. 2008, says Kristiansen, was influenced by an impairment assessment of its shares in Prosafe Production and higher than expected start-up costs related to the FPSO YÙUM K`AK`NÀAB.

The company also suffered from the termination of the BMG project, which would have given the firm a foothold in Australia/South East Asia; a market it is eager to gain greater penetration in.

“The turmoil in financial markets and the lower oil price has had some negative impact on the business,” says Kristiansen. “Some projects, like BMG, have been cancelled and many postponed.”

However, he says, in the long-term, business is sound – a cause for much optimism.

“In this period of uncertainty, our future is secured because of the long-term contracts we have with reputable clients, mentioned above,” Kristiansen explains. “Beyond the immediate horizon, we are sure that the long-term fundamentals of our business are sound. After all, there is a growing demand for energy and this will fuel demand for new oil and gas fields.

“Where would we like to develop?” he continues. “Well we have a great presence, globally, but maybe more in Australia and South East Asia – we would like some vessels there. We don’t have any there at the moment, although we are perusing several opportunities.

“Of course, there are challenges ahead but we see plenty of opportunities,” adds Kristiansen. “We believe in this segment strongly. We will suffer short-term, as will everybody else in this business, but oil is a limited resource and the world needs oil. So, as soon as we get out of this financial turmoil, we see significant growth in this sector.

“We are very positive about the long-term prospects.”

• SIGN UP to join the Energy Community
• More Energy Company Reports